1 MARY K. WARREN (NY Reg. #2557684) 2

[Pages:16]Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 1 of 16 Page ID #:1

1 MARY K. WARREN (NY Reg. #2557684) (Application for Pro Hac Vice Admission Pending)

2 Email: mary.warren@ 3 Phone: (202) 435-7815

Consumer Financial Protection Bureau 4 1700 G Street, NW 5 Washington, DC 20552

Fax: (202) 435-7722 6

7 OWEN MARTIKAN, CA Bar #177104 - Local Counsel 301 Howard St., Suite 1200

8 San Francisco, CA 94105 9 Phone: (415) 844-9790

Email: owen.martikan@ 10

11 Attorneys for Plaintiff Consumer Financial Protection Bureau

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13

UNITED STATES DISTRICT COURT

14

CENTRAL DISTRICT OF CALIFORNIA

15 Consumer Financial Protection Bureau,

16

17

Plaintiff,

18

v.

19 Judith Noh d/b/a Student Loan Pro, Judith Noh as an individual, and Syed Faisal

20 Gilani,

21 Defendants, and

22 FNZA Marketing, LLC,

23 Relief Defendant.

24

Case No. 8:21-cv-00488 COMPLAINT FOR INJUNCTIVE RELIEF, RESTITUTION, DISGORGEMENT, AND CIVIL MONEY PENALTIES

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COMPLAINT

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Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 2 of 16 Page ID #:2

1

Introduction

2

1. The Consumer Financial Protection Bureau ("Bureau") brings this action

3 against Judith Noh d/b/a Student Loan Pro, Judith Noh as an individual, Syed Faisal

4 Gilani, and FNZA Marketing, LLC under the Telemarketing and Consumer Fraud and

5 Abuse Prevention Act, 15 U.S.C. ?? 6102(c), 6105(d); the Telemarketing Sales Rule

6 ("TSR"), 16 C.F.R. pt. 310; and the Consumer Financial Protection Act of 2010

7 ("CFPA"), 12 U.S.C. ?? 5536(a), 5564, 5565, in connection with the marketing and sale

8 of debt-relief services by Judith Noh d/b/a Student Loan Pro ("Student Loan Pro"). This

9 Court has subject-matter jurisdiction over this action because it is brought under federal

10 consumer financial law, 12 U.S.C. ? 5565(a)(1), presents a federal question, 28 U.S.C.

11 ? 1331, and is brought by an agency of the United States, 28 U.S.C. ? 1345.

12

2. Defendants Student Loan Pro, Judith Noh, and Syed Faisal Gilani (the

13 "Debt-Relief Defendants") created and operated a student-loan debt-relief service that

14 charged unlawful advance fees to consumers.

15

3. Defendant FNZA Marketing, LLC ("FNZA"), which operated no business of

16 its own, was the recipient of certain of the funds obtained by the Debt-Relief Defendants

17 from charging unlawful advance fees.

18

4. The Bureau brings this action to stop the Debt-Relief Defendants' unlawful

19 conduct, obtain relief for harmed consumers, and impose civil money penalties.

20

Venue

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5. Venue is proper in this district because each Defendant is located, resides, or

22 does business in this District. 12 U.S.C. ? 5564(f).

23

Parties

24

6. The Bureau is an independent agency of the United States created by the

25 CFPA. 12 U.S.C. ? 5491(a). It has independent litigating authority and may secure

26 appropriate relief for violations of the CFPA, 12 U.S.C. ? 5564(a)-(b), and for violations

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COMPLAINT

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Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 3 of 16 Page ID #:3

1 of the TSR with respect to consumer financial products or services subject to the CFPA,

2 15 U.S.C. ?? 6102(c), 6105(d).

3

7. Student Loan Pro, a California sole proprietorship of Judith Noh, has

4 operated out of 18001 Sky Park Circle, Irvine, CA, 92614. From 2015 until 2019,

5 Student Loan Pro advertised, marketed, promoted, offered for sale, sold, and provided

6 financial advisory services in the form of debt-settlement services, in particular federal

7 student-loan debt-relief services, to consumers throughout the United States.

8

8. Judith Noh is the sole proprietor and owner of Student Loan Pro. Noh

9 resides in Anaheim, California.

10

9. Syed Faisal Gilani was the manager and owner-in-fact of Student Loan Pro.

11 Gilani resides in Irvine, California.

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10. FNZA is a California limited liability company of which Noh is the sole

13 member but which is controlled in fact by Gilani.

14

Student Loan Pro's Business Practices

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11. Student Loan Pro is a federal student-loan document-preparation and debt-

16 relief service that operated from 2015 to 2019. It prepared and submitted paperwork for

17 consumers to the U.S. Department of Education ("ED") in support of applications for

18 loan consolidation, income-driven repayment plans, forgiveness programs, and other

19 debt-relief options available to consumers with federal student loans. It also submitted

20 recertification paperwork to ED, as applicable, after a consumer's application for

21 repayment programs was accepted.

22

12. ED does not charge federal student-loan borrowers to submit applications

23 for or to participate in loan consolidation, income-driven repayment plans, forgiveness

24 programs, and other debt-relief programs or to submit recertification paperwork for those

25 programs.

26

13. Student Loan Pro was loosely organized into two units: the sales staff, who

27 took consumer calls and signed up those consumers who agreed to purchase Student

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COMPLAINT

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Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 4 of 16 Page ID #:4

1 Loan Pro's services, and the processing staff, who completed and submitted the loan

2 modification paperwork for the consumer. Each unit had a manager who reported to

3 Gilani.

4

14. Student Loan Pro marketed its services through radio advertisements. When

5 consumers called the phone number given in the advertisements, they were connected to

6 one of the company's sales staff.

7

15. The salesperson would pitch Student Loan Pro's services to the consumer

8 and, if the consumer agreed to enroll, would email a contract to the consumer for

9 electronic signature. The salesperson also took the consumer's payment information and

10 generated a schedule of payments that was attached to the contract, which the consumer

11 was required to pre-authorize.

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16. The salesperson would then refer the consumer to the processing

13 department, where a processor would read a "verification script" to the consumer and

14 obtain the consumer's oral confirmation of her payment method and the amounts to be

15 paid.

16

17. Student Loan Pro charged a $695 to $795 initial fee plus $39 per month.

17 The company required customers to pay the $695 to $795 initial fee in three installments

18 within the first three months after the customer signed the contract. The second and third

19 installments of the initial fee were due 30 and 60 days, respectively, after the first

20 payment was made. The company's practice was to try to persuade the customer to begin

21 paying the fee as soon as possible after signing up, including paying at the time of

22 enrollment.

23

18. Student Loan Pro's script used by its sales staff states: "The purpose of the

24 initial fee is for us to prepare and submit your application on your behalf to the

25 Department of Education for its consolidation program." The company's practice was

26 not to submit the customer's loan consolidation or modification application to ED until

27 the customer had paid at least the first installment of the initial fee.

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COMPLAINT

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1

19. The customer would pay $39 per month beginning one month after the third

2 installment of the "initial fee" was paid. The $39 monthly fee was required as long as the

3 customer remained with Student Loan Pro and was purportedly for the company's

4 services in monitoring the customer's loan account and recertifying the customer's

5 eligibility for the loan modification that Student Loan Pro obtained for him or her. All

6 customers paid the monthly fee, although recertification is not required for all loan

7 modification programs, such as consolidation.

8

20. After the contract was signed, Student Loan Pro automatically charged or

9 debited the customer's bankcard or debited the customer's bank account for the three

10 installments of the "initial fee" and the monthly $39 fee on the dates listed in the schedule

11 attached to the contract.

12

21. Student Loan Pro did not monitor whether or when the customer made a first

13 payment on his or her consolidated or modified student loan debt. Student Loan Pro did

14 not wait until the terms of a customer's debt were altered, or until a customer had made

15 his or her first payment on the altered debt, before requesting or receiving fees from the

16 customer.

17

22. From 2015 to 2019, Student Loan Pro enrolled more than 3,300 customers in

18 multiple states. During that period, the company's customers paid more than $3,500,000

19 in fees. Student Loan Pro ceased operations in November 2019.

20

Role of Judith Noh

21

23. Noh and Gilani organized Student Loan Pro's corporate structure to conceal

22 Gilani's role as the company's de facto owner and chief executive.

23

24. In September 2015, Noh formed and registered Student Loan Pro as an

24 Orange County sole proprietorship under the name "Judith Noh d/b/a/ Student Loan Pro."

25 Noh is the owner of Student Loan Pro and all of its assets and liabilities.

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25. Noh opened three bank accounts under the name of Judith Noh d/b/a Student

27 Loan Pro and designated Gilani as a co-signer on them all. Noh opened merchant

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COMPLAINT

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Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 6 of 16 Page ID #:6

1 processing accounts and signed contracts with the payment processing companies for

2 Student Loan Pro so that Student Loan Pro could accept credit and debit card payments

3 from consumers. She designated Gilani as the contact person at Student Loan Pro for

4 those accounts.

5

26. Noh also opened an account with Debt Pay, Inc., so that her company could

6 use its DebtPayPro customer relations management database to enter customer

7 information and contracts, monitor customer payments, and record progress on

8 consolidating or otherwise modifying customers' student loan debt. Noh gave Gilani

9 access to Student Loan Pro's DebtPayPro database.

10

27. Noh was listed as the owner and customer complaint contact for Student

11 Loan Pro on the Better Business Bureau's public website.

12

28. Noh became involved in an investigation conducted by the Washington State

13 Attorney General's Office ("Washington AG") concerning the fees charged by Student

14 Loan Pro, among other aspects of Student Loan Pro's operations. On April 21, 2017, a

15 copy of the Washington AG's civil investigative demand investigating Student Loan Pro

16 for possible "unfair or deceptive acts or practices ... associated with the consolidation or

17 adjusting of student loan debt" was delivered to Noh's home address.

18

29. Student Loan Pro settled the investigation with the Washington AG by

19 entering into an Assurance of Discontinuance that required the company to, among other

20 things, provide restitution to customers residing in Washington State. On August 12,

21 2017, Noh wrote and signed the check to the Washington AG for restitution to

22 Washington customers under the Assurance of Discontinuance.

23

30. In 2013, Noh registered a California limited liability company called Quick

24 Student Loan Solution, LLC. ("QSLS"), with herself as the sole member. According to

25 consumer complaints, QSLS offered student-loan debt-relief services and it was managed

26 by Syed Gilani. Noh cancelled the registration of QSLS in September 2015 around the

27 time she registered Student Loan Pro.

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COMPLAINT

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Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 7 of 16 Page ID #:7

1

Role of Syed Gilani

2

31. Gilani ran all aspects of Student Loan Pro's operations and used its earnings

3 for his personal expenditures.

4

32. Gilani was a signatory on the company's bank accounts and had his own

5 debit card for the main operating account. Gilani routinely wrote checks on or made

6 withdrawals or transfers from the company's accounts.

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33. Gilani supervised the managers of the company both in person at the

8 company's offices and by telephone and email. Gilani determined the fee to be paid by

9 customers, including that fees were to be requested and received before the customer had

10 made at least one payment on his or her altered debt.

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34. Gilani edited the scripts that Student Loan Pro's sales staff used to sign up

12 consumers and had the final say over their content.

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35. Gilani monitored the company's DebtPayPro database on a daily basis to

14 check on the status of customer payments and new enrollments.

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36. Gilani managed the company's merchant processing accounts and was the

16 primary contact person with the payment processors.

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37. Gilani was informed of customer complaints by emails to him from the

18 company's payment processors and the Better Business Bureau and by reports from his

19 managers. On some occasions he spoke directly with the complaining customer.

20

38. Gilani was personally involved in settling the Washington AG investigation

21 and another investigation by the Minnesota Department of Commerce. After the state

22 actions were settled, Gilani did not change Student Loan Pro's practices with respect to

23 advance fees, although the Minnesota investigation specifically addressed them.

24

Role of FNZA

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39. Noh formed FNZA as a California limited liability company in September

26 2015, with herself as the sole member. Noh opened a bank account for FNZA soon

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COMPLAINT

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Case 8:21-cv-00488 Document 1 Filed 03/16/21 Page 8 of 16 Page ID #:8

1 thereafter and made Gilani a co-signer. Gilani obtained a debit card for the FNZA

2 account.

3

40. FNZA operated no business. FNZA provided no services to Student Loan

4 Pro. FNZA made no loans to Student Loan Pro.

5

41. Gilani transferred more than $400,000 from the operating account of Student

6 Loan Pro to FNZA's bank account. Gilani's transfers from Student Loan Pro to FNZA

7 consisted of advance fees illegally obtained from Student Loan Pro customers as a result

8 of the Debt-Relief Defendants' violations of the TSR and CFPA.

9

42. Gilani withdrew the funds transferred from Student Loan Pro to FNZA for

10 personal expenditures, including purchases at Bloomingdale's and visits to nightclubs.

11 The bulk of such expenditures were repeated "purchases" of $10,000 or $5,000 at

12 California and Nevada casinos.

13

VIOLATIONS OF THE TSR BY THE DEBT-RELIEF DEFENDANTS

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43. The Bureau is authorized to enforce the Telemarketing Act and the TSR

15 with respect to the offering or provision of a consumer financial product or service

16 subject to the CFPA. 15 U.S.C. ? 6105(d). Among other things, a consumer financial

17 product or service is defined by the CFPA to include "providing financial advisory

18 services ... including ... providing services to assist a consumer with debt management

19 or debt settlement [or] modifying the terms of any extension of credit...." 12 U.S.C.

20 ? 5481(15)(viii)(II).

21

44. The TSR defines "debt relief service" as "any program or service

22 represented, directly or by implication, to renegotiate, settle, or in any way alter the terms

23 of payment or other terms of the debt between a person and one or more unsecured

24 creditors or debt collectors, including, but not limited to, a reduction in the balance,

25 interest rate, or fees owed by a person to an unsecured creditor or debt collector." 16

26 C.F.R. ? 310.2(o).

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COMPLAINT

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